Merkel Cites East German Lessons for EU’s Problem States

By Joseph de Weck -
Feb 19, 2013

Chancellor Angela Merkel said that
European countries burdened by the fallout of the euro-area debt
crisis can learn from East Germany’s experiences of economic
overhaul after the fall of the Berlin Wall.

Merkel, Germany’s first chancellor from the former
ccommunist east, said in a speech to regional professionals and
trade-chambers representatives yesterday that her East German
background had taught her there is no way around enacting
reforms to become more competitive.

“When we became part of the Federal Republic of Germany we
had to carry out massive reforms to restructure our economy,
also with great upheaval,” Merkel said in the western city of
Mainz. “But this was necessary to create a solid basis of small
and medium-sized companies in the new states.” While the
eastern German regions have since been eligible for special
European Union funds and subsidies, “at the end of a structural
reform there must be a competitive company,” she said.

Merkel, as the leader of Europe’s biggest economy, has been
at the forefront of pressing euro states hurt by the debt crisis
to overhaul their labor markets and carry out other reforms to
better compete in a globalized world. She plans to jointly
present steps aimed at raising competitiveness with French
President Francois Hollande at an EU summit in June.

Agenda 2010

In addition to her experiences in East Germany, Merkel
cited a set of German reforms collectively known as Agenda 2010
that were pushed through by her Social Democratic Party
predecessor, Chancellor Gerhard Schroeder, as an example to
Europe of the need to raise competitiveness.

The Agenda 2010 package of labor reforms and welfare cuts
prompted street protests in Germany in 2004 against Schroeder’s
SPD-led coalition with the Greens. Merkel defeated Schroeder to
become chancellor the following year after unemployment reached
a post-World War II high of 12.1 percent. The Paris-based
Organization for Economic Cooperation and Development is among
the bodies that credit Schroeder’s measures for helping to bring
down the German jobless rate to 6.8 percent in December 2011,
the lowest since reunification of East and West Germany in 1990.

Agenda 2010 “has brought us to the situation we are in
today, it didn’t fall out of the sky,” said Merkel, who will
seek a third term in federal elections on Sept. 22. “At the
beginning of the 21st century, Germany was the sick man of
Europe and that we are where we are today also has to do with
reforms we carried out in the past. That’s why we can say in
Europe that change can lead to good.”

Latest Poll

Support for Merkel’s CDU/CSU bloc rose 1 percentage point
to 40 percent in a weekly Insa poll for today’s Bild newspaper.
Her Free Democratic Party partner also gained a point to 5
percent, giving the coalition a combined 45 percent. The main
opposition Social Democrats held at 29 percent, while their
traditional Green Party allies were also unchanged at 15
percent, yielding a total of 44 percent. The opposition Left
Party held at 6 percent.

So long as the Left gets into parliament, neither Merkel’s
current coalition nor the SPD-Greens have their own majority,
Bild cited INSA chief Hermann Binkert as saying. Insa polled
2,023 voters on Feb. 15-18. The margin of error was plus or
minus 2 percentage points.